Pennzoil and Quaker State form joint venture

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Pennzoil Co. and Quaker State Corp. announced a tentative deal today to form a new, publicly traded company that would combine both companies' motor oil, franchisee operations and carcare products. The deal needs the OK of the Federal Trade Commission. But a Pennzoil spokesman, said the companies expect the deal to win approval. He added it would make sense to keep both brand names. Pennzoil leads the U.S. among motor oils in market share, followed by Quaker State. But Pennzoil's strength is in the West and Midwest, while Quaker State is stronger in the Northeast.

The companies' statement said the deal would save between $90 million and $120 million annually in efficiencies, including marketing. While the spokesman said it's possible the new company would use only one ad agency, no decision has been made.

GSD&M, Austin, Texas, has handled Pennzoil's $40 million account since 1996. Quaker State's $20 million account is handled by Leagas Delaney, San Francisco, following a review that ended this year.

Pennzoil will keep its oil exploration and production separate.

Copyright April 1998, Crain Communications Inc.

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